Reserve Bank of India Governor Shaktikanta Das on Wednesday warned that the next financial crisis will come from private cryptocurrencies, reported Business Standard.
Speaking at the newspaper’s BFSI Insight Summit, Das also said that cryptocurrencies should be banned.
“Mark my words, the next financial crisis will come from private cryptocurrencies... After the FTX episode, don’t think we need to say anything more on crypto,” he said.
FTX, the world’s second-largest cryptocurrency firm, had filed for bankruptcy in November. The development had come after cryptocurrency platform Binance agreed to buy FTX but backed out a day later.
Binance had said that it aborted the deal after it was made aware of the mishandling of customer funds and alleged investigations by United States agencies against FTX.
On Wednesday, Das said cryptocurrencies have no underlying value and pose a threat to macroeconomic stability.
“The term cryptocurrency is a fashionable way of describing what is otherwise a 100% speculative activity,” he added.
Das also added that private cryptocurrencies were made to bypass the established system and they do not believe in the regulated financial world, according to Business Standard.
“I am yet to hear any credible argument about what public purpose it serves,” the RBI governor said.
While Das spoke against cryptocurrencies, he backed the virtual currency or central bank digital currency launched by the RBI. Virtual currencies are similar to cryptocurrencies but they are regulated by central banks, reported The Indian Express. The RBI-backed virtual currency, also known as the digital rupee, was launched for retail users in four Indian cities on December 1.
Das said that the central bank’s digital currency provides the facility to “sweep in, sweep out” the money from the bank automatically.
He also said that the digital currency would also save logistical costs incurred on paper, ink and printing presses. For international transactions, it can lead to instant money transfers, Das added.
“The world is becoming more and more digital... in days to come, more and more central banks will embrace digital currency,” he added.